Most personal, student, auto and small-business loans are amortizing installment loans: you pay the same amount every month, and each payment covers that month's interest plus a slice of principal, so the balance reaches zero on the last payment. Borrowing $25,000 at 7.5% for 60 months costs $500.95 a month and $5,056.92 in total interest.
This loan calculator gives the payment, the total you will repay, how the first payment splits between interest and principal, and what happens if you add a little extra each month. The Consumer Financial Protection Bureau describes the same amortization process for mortgages: lenders use a standard formula so that each payment covers the interest due and the loan is paid off exactly at the end of the term.
How to use the loan calculator
- Enter the amount you will borrow (after any down payment).
- Enter the interest rate. If you have an APR from the lender, using it gives a payment that reflects fees financed into the loan.
- Enter the term in months or switch the unit to years.
- Optionally enter an extra amount to add to every payment and see how much sooner the loan is paid off and how much interest you save.
Formula
L is the amount borrowed, r is the annual rate ÷ 12 and n is the number of monthly payments. With a 0% rate the payment is simply L ÷ n.
Worked example
A $25,000 loan at 7.5% APR for 60 months.
- r = 0.075 ÷ 12 = 0.00625; n = 60.
- Payment = 25,000 × 0.00625 ÷ (1 − 1.00625−60) = $500.95.
- Total of payments: $500.95 × 60 ≈ $30,056.92, so total interest ≈ $5,056.92.
- First payment: interest $25,000 × 0.00625 = $156.25; principal $500.95 − $156.25 = $344.70.
Adding $100 a month pays the loan off in 49 payments instead of 60, 11 months early, and saves about $1,013.61 in interest. Enter 100 in the extra-payment box to check.
Choosing a term
A longer term lowers the payment but increases total interest, because the balance stays high for longer. The same $25,000 at 7.5% costs about $777 a month over 36 months (≈$3,000 interest) versus $501 over 60 months (≈$5,057 interest). Before stretching a term to make a payment fit, check the lender's fees, which the apr calculator turns into a comparable APR, and your overall debt-to-income ratio.
For loans that charge interest only on the original principal, such as some short-term notes, use the simple interest calculator. For revolving credit card balances use the credit card payoff calculator.
Caveats and assumptions
- Assumes a fixed rate, equal monthly payments and that the first payment is due one month after funding.
- Origination fees, insurance add-ons and late fees are not included unless you add them to the loan amount.
- Some lenders apply extra payments differently or charge prepayment penalties; check your agreement.
- Lenders round each month’s interest to the cent, so the last payment on a real schedule may differ by a few cents.
Frequently asked questions
What is the monthly payment on a $25,000 loan at 7.5% for 5 years?
$500.95 a month, with about $5,056.92 of total interest.
How do I calculate a loan payment by hand?
Divide the annual rate by 12 to get r, then payment = L × r ÷ (1 − (1 + r)^−n), where L is the amount and n the number of months.
Does paying extra each month really save money?
Yes. Extra principal lowers the balance that interest is charged on, so the loan ends sooner and total interest falls, unless your loan has a prepayment penalty.
Should I enter the interest rate or the APR?
Use the note rate to match the lender’s payment. Use the APR to compare offers, because the APR includes certain fees.
Why is my first payment mostly interest?
Interest is charged on the outstanding balance, which is highest at the start. Each payment shrinks the balance, so the interest share falls over time.
Sources
- CFPB — How does paying down a mortgage work? (amortization) — how fixed payments split between interest and principal
- CFPB — Regulation Z, Appendix J (APR computations) — actuarial method used for closed-end loans
- Investor.gov — What is compound interest? — interest on a balance over time
This calculator gives estimates for planning and education only. It is not financial, tax or investment advice. Your lender, card issuer, employer or tax authority uses its own terms, fees and rounding, so confirm figures with them before deciding. See our disclaimer and how we build and check calculators.